Answer:
The annual compounded interest rate of an investment with a stated interest rate of 6% compounded quarterly for seven years is 6.14%.
Explanation:
Interest Rate = r = 6% = 0.06
Compounding = n = quarterly = 4 times a year
Number of years = t = 7 years
Annual Compounded interest rate = [( 1 + r/n )^n] - 1
Annual Compounded interest rate = [( 1 + 0.06/4 )^4 ] - 1
Annual Compounded interest rate = [( 1 + 0.015 )^4 ] - 1
Annual Compounded interest rate = [( 1.015 )^4 ] - 1
Annual Compounded interest rate = 1.06136355 -1
Annual Compounded interest rate = 0.06136355
Annual Compounded interest rate = 6.14%
